Saturday, July 11, 2015

Slow Saturday Special: The World Economy

"Federal Reserve chair Janet Yellen sees reasons for encouragement — consumer spending appears to be picking up, and employment is likely to keep expanding. But she also outlined a host of concerns, from low wage growth to a low labor participation rate to ‘‘disappointing’’ productivity."

ATHENS — Prime Minister Alexis Tsipras has clinched the backing of Greek lawmakers for his bailout proposal, a prelude to a weekend of political wrangling in Brussels that may determine his nation’s place in the euro.And the status of his government given the wave of Greek people hitting the streets.

Tsipras won overwhelming support for the package of spending cuts, pension savings, and tax increases with a majority of 251 votes in the 300-seat parliament early on Saturday.Then they are all traitors.

The country’s three creditor institutions also assessed the program positively as Tsipras can nowvaunt Parliament’s support as a show of domestic resolve to his European counterparts while the vote keeps alive such hopes and provides evidence that the government commands broad support to negotiate a deal.The deal is worse than the one voted down by the Greek people, by at least a 61-39 margin. If I wasn't following this on a daily basis my head would swiveling around at light speed from the spin.

It came at a cost for Tsipras.Oh, yeah?

Seventeen members of his ruling coalition didn’t back the plan, including Syriza heavyweights Zoi Konstantopoulou, the Parliament speaker, and hard-line leftist energy minister Panagiotis Lafazanis. The vote result could weaken his grip on power and complicate implementation of any potential bailout agreement.(Blog editor applauds loudly)

Lawmakers began discussing the bailout proposal at about 11:53 p.m. Friday in Athens and spoke through the early hours of Saturday.They snuck it through while the people were sleeping, just as they do things here.

Finance Minister Euclid Tsakalotos declared Greece is now in a better position than before the July 5 referendum where voters followed government advice and rejected terms of a previous bailout proposal. “Greek people didn’t give a mandate for rupture,” Tsipras told lawmakers. “They gave a mandate to strengthen the government’s negotiating power for an economically sustainable deal.”

"A lot of money was lost and made back this week, all in the name of debts coming due.The wild ride began Sunday with voters in Greece urging their government to reject harsh bailout terms for the country’s unpayable loans. Halfway around the world, investors in China learned the painful price of financing their country’s bull market with borrowed money. The panicked selling got so extreme that some 1,400 companies in China halted trading in their shares, which proved to be an important pause that helped the markets regain their footing.

With the Chinese government moving to prop up its stock exchanges, and the Greek government abruptly signaling that the country would swallow its medicine after all, financial markets in Europe and Asia staged an emphatic recovery by week’s end. Oh, that is so insulting. The paper has self-internalized the values of the elite cla$$ it serves.

And through it all US stock markets barely responded to the drama; the week of trading was relatively mild given all the tumult in the world. The most excitement was an unusually long computer failure that halted trading on the New York Stock Exchange for half a day Wednesday. This, too, proved to be little more than a blip in an otherwise memorable week."

In 2013, the Registry of Motor Vehicles chose Deloitte for a $76.8 million contract to help revamp the agency’s decades-old software system.

Two years and nearly $17 million later, the outdated system has yet to be replaced, but the agency is terminating the contract.

Erin Deveney, interim head of the RMV, sent a message Friday to employees involved with the effort, indicating that the state would drop Deloitte’s contract and cease work on the project.

But she provided little explanation, saying simply that the project “is not in alignment with the goals of the Baker administration.”

“No new work will be taking place on this program effective immediately and we will begin to work on an orderly transition plan,” she wrote.

Through a spokesman, Deveney did not respond to a request for comment.

Deloitte officials pointed out the system replacement wasn’t scheduled for 2015.

“We are aware of the administration’s decision and Deloitte remains deeply committed to the Commonwealth and will honor any transition needs as this project winds down,” spokeswoman Courtney Flaherty said in an e-mail.

Overall, the state had expected to spend about $160 million on the software modernization and had spent about $60 million on the project so far, according to Michael Verseckes, a MassDOT spokesman. Verseckes said the new system was slated to be replaced by late 2017.They spent $60 million for another Deloitte pos.

Deloitte was under close scrutiny in 2013 for other state projects..

In 2013, Deloitte helped the state launch an unemployment benefits system that was completed two years late, millions of dollars over budget, and rife with errors, according to a Globe report.Related: State Lied About Unemployment WebsiteThat was a theme during the Patrick regime, and all Obummercare compliance cost was a destruction of the system and a cool $300 million (and counting) to fix.

The state’s Department of Revenue also fired Deloitte in 2013 in the middle of a $114 million contract to overhaul the state’s tax-filing system.No wonder you are not done yet.

For about a decade, state officials have hoped to update the RMV’s system, which came online in the 1980s.

They wanted to consolidate a license database and a vehicle registration database, which would provide employees with a more user-friendly system. The revamped system could also help customers access their own Registry records online.

The RMV project started on a high note in 2013, when officials chose Deloitte to help lead the project.It always does when the state is involved.

Rachel Kaprielian, head of the agency at the time, brushed aside concerns about Deloitte’s selection when the company was already under increased scrutiny over its other work with the state.Who did she know that benefited from the contract?

Kaprielian, who was later named the state’s labor and workforce development secretary, told the Globe in 2013 that the RMV contract included several deadlines and other stipulations to ensure that the project moved according to schedule.

In Deveney’s message to employees Friday, she wrote that the decision to terminate Deloitte’s contract did not mean that the agency would abandon its effort to modernize its system.

She pointed out that the 2016 spending plan for long-term investment projects approved by the Massachusetts Department of Transportation board of directors included $34.4 million for the project.

Officials have said the Registry will still undertake other efforts to improve service, including hiring more customer service employees, updating online and kiosk services, and increasing social media efforts.

Now you know why the courts are all clogged up, too.Sorry for the glitch, readers.NDU:

"Final talks on bailout for Greece yield little progress; Europe’s finance ministers set to reconvene today" by James Kanter New York Times July 11, 2015

BRUSSELS — A meeting of European finance ministers broke up late Saturday with no agreement on whether Greece should be granted its third bailout since 2010, reflecting deep divides about whether the Athens government can be trusted to repay huge new loans and leaving the continent hours from what could be a historic rupture.What's the first thing I notice? Reedited, rewritten update.

The finance ministers planned to reconvene Sunday, just before European national leaders are scheduled to gather in Brussels for what they have said would be a final decision on whether Greece should qualify for a new aid package, a step that would probably determine whether the country can remain in the euro currency union.

The failure to reach agreement, after nearly nine hours of talks, belied the optimism that followed the approval early Saturday by the Greek Parliament of a package of pension cuts, higher taxes, and other policy changes long sought by Greece’s international creditors.That's about the extent of the verbatim print.

In a remarkable turnabout, Prime Minister Alexis Tsipras had pushed the package through the legislature despite having led his country into a referendum six days earlier that overwhelmingly rejected many of the same terms.

But despite Greece’s capitulation on those terms, many countries came into this weekend’s final round of negotiations skeptical of the Tsipras government’s commitment to seeing through the changes and putting his country on firmer financial footing — and weary of the constant brinkmanship that has characterized the months of negotiations over Greece’s latest crisis.Good way to put it. Goddamn bankers wore 'em down.

Alexander Stubb, the Finnish finance minister, told journalists as he left the meeting, which ended shortly before midnight, “We will continue the discussions tomorrow.”

From the start, it was clear that Tsipras’s gambit had not entirely won over Germany and other countries that have been skeptical about giving a new round of loans to Greece after years in which successive governments in Athens have struggled to carry out changes that its creditors have demanded as a condition of the bailouts.Go talk to their people who are in the street as I type.

“We will have exceptionally difficult negotiations,” Wolfgang Schaeuble, the German finance minister, said Saturday before the meeting. “We won’t be able to rely on promises.”I never do, especially when they come from politicians and governments.

His prediction proved accurate, as he and fellow ministers wrangled for hours with little apparent progress, seeking more assurances from Greece that it was committed to changing its ways, and weighing the desires of France and Italy for a deal against the more skeptical stance of Germany and the possibility of outright opposition from Finland.

During the meeting, the finance ministers called on their Greek counterpart, Euclid Tsakalotos, to put the package proposed by his government into swift effect to prove its willingness to make deep and lasting changes to the nation’s faltering economy. Greece, in turn, continued to seek some assurance that it would win the right to renegotiate the terms of its debt repayment.Sorry I'm down on all the analysis and everything. Tsipras's betrayal really flattened be, and it's such a step back.

It was not clear that the talks would yield a consensus about how to proceed, raising the possibility that the finance ministers would leave final decisions to national leaders.

“I am still hopeful,” Pierre Moscovici, the European commissioner for economic affairs, told reporters as he left the Eurogroup meeting.

In an apparent effort to raise the pressure on Greece, some German and Finnish officials were informally passing around a one-page position paper, reportedly drawn up by the German finance ministry as a possible option for the negotiations, saying the Greek proposal fell short and suggesting options that included ideas like having the country leave the eurozone for five years and then reapply for membership.Yeah, cut 'em loose. It'll make the bottom line look better. Then the Greeks won't have to repay a penny, drachma, euro, whatever.

The idea of a five-year break from the euro was not openly discussed at the finance ministers’ meeting Saturday afternoon, said an official with direct knowledge of the talks. The official spoke on the condition of anonymity because the discussions were still underway.

The European leaders have set this weekend as a deadline for settling the issue of whether to keep Greece solvent or cut off further aid, a step that would almost certainly result in Athens being forced to abandon the euro. An exit by Greece would be a blowto Europe’s goal of ever-closer integration.You get a mixed message there. They tell us it won't shatter economies, everything is insulated, and then they are running around with hair on fire regarding their globalization scheme.

Greece’s banks are teetering on insolvency, the government is running out of cash to meet its day-to-day obligations, and without an infusion of aid, additional payments to international creditors will be missed in coming weeks.What did I tell you about the "aid?"

Experts who reviewed Greece’s request for a third bailout program informed Eurogroup ministers that about 74 billion euros was needed to cover its financing needs for the next three years, according to a person with direct knowledge of the experts’ findings. That is far more than the 53.5 billion euros, or about $59 billion, that Athens has requested.

If loans for Greece are eventually approved, the majority will probably be covered by a new loan from the European Stability Mechanism, the European bailout fund.

Print continued: "Other sources could include loans from the International Monetary Fund, funds raised through Greek government revenue and, eventually, new debt issued by Greece. Government revenue is a fancy way of saying higher taxes and fees along with a fire-$ale regarding the people's assets being held by government via a contract of trust. And when that trust has been broken?That discrepancy between what Greece had requested and the new estimate of its bailout needs may have further reinforced the doubts of those who wonder if the Greek government has a handle on its finances and will be able to carry out promised changes.While no signed bailout deal was expected this weekend, the question is whether Europe will decide to continue negotiating a rescue with Greece, or leave its banks to collapse and its virtually bankrupt government to default. European leaders have said their Sunday evening meeting could be used to reach that decision.The fear of Greece and its supporters, which include the French government, is that without an agreement to continue negotiations, Greek banks could collapse next week, raising the prospect that the country would quickly have to abandon the euro, soon tumbling out of the euro currency union, undermining a cornerstone of the European Project."

Also something about good money after bad and a 50-50 chance of a deal that was scrubbed.

--more--"That's a switch from what has been a pattern the last few weeks.

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